Disney's Q3 Earnings: Revenue And EPS Beat, Streaming Business Turns Profitable, Strong ESPN Revenue Boost

Walt Disney Co DIS reported fiscal third-quarter 2024 revenue growth of 4% year-on-year to $23.16 billion, marginally beating the analyst consensus estimate of $23.11 billion. Adjusted EPS of $1.39 beat the analyst consensus estimate of $1.20.

Segments: Entertainment revenue increased by 4% year over year to $10.58 billion, mainly driven by subscription revenue growth due to price increases and customer growth for Disney+ Core, CNBC reports.

Sports revenue grew 5% year over year to $4.56 billion. Experiences revenue climbed 2% year over year to $8.39 billion.

In the Entertainment segment, Linear Networks revenue declined by 7% year over year to $2.66 billion, Direct-to-Consumer revenue climbed 15% year over year to $5.81 billion, and Content Sales/Licensing and Other revenue declined by 4% year over year to $2.11 billion.

The consolidated operating income grew by 19% year over year to $4.23 billion, led by the positive results for Disney's entertainment unit, particularly streaming.

Disney's combined streaming business, which includes Disney+, Hulu, and ESPN+, turned a profit for the first time, a quarter earlier than expected. The streaming unit posted an operating profit of $47 million, a significant improvement from a loss of $512 million in the same quarter last year. However, excluding ESPN+, the direct-to-consumer streaming division reported a loss of $19 million. Revenue for traditional TV networks declined by 7%.

ESPN's domestic and international business, excluding Star India revenue, saw a 5% revenue increase. This growth was driven by a 17% rise in domestic advertising and an increase in subscription revenue.

Revenue from U.S. parks and experiences increased 3% year over year to $5.82 billion, while international sales climbed 5% year over year to $1.60.

ESPN's revenue rose 5% year over year to $4.28 billion. The operating income climbed 4% year over year to $1.09 billion. 

Outlook: Disney expects a fiscal 2024 adjusted EPS growth target of 30% (prior 25%), compared to the $4.77 consensus estimate.

The company expects Disney+ Core subscribers to grow modestly. It is on track for the profitability of combined streaming businesses to improve in Q4, with both Entertainment DTC and ESPN+ expected to be profitable in the quarter.

Price Actions: DIS stock is trading lower by 0.86% at $89.20 premarket at the last check on Wednesday.

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